David Aldrich, North Highland
In 2011, the Houston Astros professional baseball team was one of the worst teams in baseball. From 2011-2014 the franchise lost more games than they won, finishing with a 187-358 record. Now they are celebrating the 2017 World Series championship and it’s not a fluke; they did not simply ride in on a hot streak. The Astros put together a strategy and have executed that plan flawlessly for six years. The oil and gas industry can learn several lessons from the Astros’ flawless execution and begin their own systematic transformation to become the industry champions they envision.
Let’s take a closer look at how the Astros manufactured their success and understand three key lessons that the oil and gas industry can implement now to enable profitable operations for years to come.
Build your data and analytics capability to transform raw information into actionable value
The Astros are a league-leader in data analysis. The team relies extensively on insights from their cloud-based analytics engine “ground control.” The operations team built in-house algorithms and models that guided Astros’ decision-making in all aspects of their clubhouse – from who to draft, what defensive shifts to play, to what throws a specific pitcher should execute more (or less). Many oil and gas companies struggle to fully utilize the data within their digital platforms to drive quality initiatives or identify opportunities for improvement.
Your first priority is an investment in overall database architecture and data visualization so operations teams can access real-time data across multiple production systems (i.e., SCADA, DCS, Maintenance, Materials Management, Procurement, and Engineering).
In addition, technology departments must build artificial intelligence capabilities needed for tomorrow. Consumer technologies like Siri and Alexa use artificial intelligence to learn from our preferences to model their future responses. Similarly, the oil and gas industry can apply adaptive technologies to gain efficiencies and make better production decisions.
Cultivate and enable your employees to deliver successful results
Case in point – the Astros’ batting heroes of the World Series: George Springer, Alex Bregman, Jose Altuve and Carlos Correa. These four players produced 32 hits and 11 Home Runs in seven games and each grew up inside the Astros organization. They were all drafted or signed as amateurs – not acquired as super-star free agents or added via trades. The Astros’ recruiters, management and coaches recognized their talent and trained them to reach their full potential.
The oil and gas industry (despite the layoffs of recent years) is flush with talent, from best in class engineers and geo-scientists to technologists and operational contributors who understand how your company works from the inside. Most of the time this talent is siloed within a specific function. The industry needs to embrace the power of teams and endeavor to create cross-functional and collaborative projects where members are accountable for everything from initial strategy through execution. This team-based approach is the first step toward enterprise agility and critical to reducing inefficiencies created from handoffs, rework, and lack of accountability. Individuals must be given the chance to experience a variety of roles, levels of responsibility and coaching support while they fail, learn and grow.
Take a disciplined approach to performance improvement
In 2013 the Astros struck out 1,535 times, an MLB record. Three seasons later they became the best batting team in baseball, with the fewest strikeouts in the league. They achieved this incredible transformation through structural changes – releasing several players with high strikeouts, creating tailored coaching for individual players and implementing metrics (e.g., a new daily swing-scoring system). Every day the Astros worked to improve their plate performance.
Since the downturn, energy companies have similarly attacked efficiency initiatives by lowering the break-even price at which they remain profitable. Recently, the price of oil has reached multi-year highs. In the past this economic improvement signaled business leaders to loosen their grip and relax cost-improvement measures. This season, take a lesson from the Astros and double-down on performance enhancing measures and expand performance improvement efforts. Successful cost-reduction programs are an excellent source of funding for new growth initiatives. Ensure these efforts have the appropriate stakeholder engagement, effective management and strategic thinking to lay the foundation for future profitability regardless of price environment.
David Aldrich is a management consultant with North Highland. He has over eight years of experience in operations, capability improvement and sales effectiveness in the oil and gas, aviation and construction industries. Specific areas of expertise include strategy development, business analysis, master data management, and business process improvement/implementation.